Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - 13th Dec 17
A Former Wall Street Veteran: Good Traders Are Born, Not Trained - 12th Dec 17
Buy Gold, Silver Time After Speculators Reduce Longs and Banks Reduce Shorts to Continue? - 12th Dec 17
Masters of Economic and Political Illusion – in Taxes, Debt, Government, and Markets - 12th Dec 17
Approved Used Land Rover Main Dealer Real Customer Buying Guide - Hunters, Chester - 12th Dec 17
Gold Price 100% Bullish Signal - 12th Dec 17
Epic Stock Market & Fixed Income Bubble Will Not End Well - 12th Dec 17
Bitcoin can be stolen. Although Can’t be hacked - 11th Dec 17
Have Stocks Reached A Permanently Rigged Plateau? - 11th Dec 17
Trying To Beat The System Is A Fatally Flawed Investment Strategy - 11th Dec 17
Is This The Beginning Of The Next Silver Rush? - 11th Dec 17
The Dow Gold Ratio - 11th Dec 17
Evidence of a Stock Market Top Mounting - 10th Dec 17
Bitcoin Doesn’t Exist – Forks and Mad Max - 10th Dec 17
Bitcoin Doesn’t Exist – Putting the Banks Out of Business - 9th Dec 17
China’s Struggle for Market Economy Status - 9th Dec 17
Is Gold Really Strong? - 9th Dec 17
Bitcoin Parabolic Mania - 8th Dec 17
SPX Make a 61.8% Retracement - 8th Dec 17
Gold, Stocks and Bonds - The 3 Amigos Update - 8th Dec 17
Gold Stocks Break, Gold to Follow - 8th Dec 17
4 Charts That Show How Trump Tax Cuts Will Trigger A Recession - 8th Dec 17
Precious Metals Breaking Down! 3 Amigos to Abort? 4 Horsemen to Ride? - 7th Dec 17
Bitcoin Just Smashed Through $12k… Wait, $13k… Now $14k… This Is Getting Ridiculous! - 7th Dec 17
Stock Market Tops Look Like This - 7th Dec 17
Crude Oil, Oil Stocks and Invalidation of Breakouts - 7th Dec 17
Bitcoin Doesn’t Exist – 2 - 7th Dec 17
British Pound Sterling Volatility In Crucial Week of Brexit Talk - 6th Dec 17
Day Trading vs Swing Trading: Which One is the Better Strategy? - 6th Dec 17
Crude Oil and Negative Divergences - 6th Dec 17
EU Bailins Coming – 114 Italian Banks Have NP Loans Exceeding Tangible Assets - 6th Dec 17
Bitcoin Doesn’t Exist - 5th Dec 17
Advantages of Car Insurance to Protect a Vehicle - 5th Dec 17
How High Will Gold Go? - 5th Dec 17
The Loonie Takes Flight -- BUT a "Labor Miracle" is NOT the Reason Why - 5th Dec 17
The True Meaning of Bitcoin's 'Success' - 5th Dec 17
Gerald Celente: Middle East Wild Cards Could Bring Down Markets, Drive Up Gold - 5th Dec 17
Silver’s Positive Fundamentals Due To Strong Demand In Key Growth Industries - 4th Dec 17
Stock Market Positive Expectations, But Will S&P 500 Continue Higher? - 4th Dec 17
Bitcoin Achieved What The Gold Market Never Could & Never Will? - 4th Dec 17
Stock Market Top Distribution Starting - 4th Dec 17
Understanding Real Time Forex Trading - 4th Dec 17

Market Oracle FREE Newsletter

Traders Workshop

China’s Rare Earths Game Attracts Players Worldwide

Commodities / Metals & Mining Nov 02, 2011 - 04:58 AM GMT

By: Anthony_David

Commodities

Early 2011 saw stock prices of rare earth companies soaring upwards with the share price of Colorado based Molycorp Inc. reaching $79.16 per share. However, Molycorp share prices fell by 32% over four days in September. The price fall was partly because of falling rare earth prices worldwide combined with excess inventory and partly because of overall market trends. Stock prices of Australia’s Lynas Corp have also been adversely hit by falling rare earth prices. Average rare earth oxide prices have fallen almost 20% over the last quarter. Recent developments could however bring about another hike in rare earth prices, which would mean sunny fortunes once again for non-China based rare earth producers.


The world’s largest rare earth producer, China’s Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech, has halted production for a month in an effort to push prices upwards. A company official said, “Production should resume in a month as it is just a provisional measure.” According to the company, the current move to stop supplies of raw materials to its processing units was to “stabilize the market and balance supply and demand.” A similar month-long production halt had been called in May 2008 as well. Investors have not reacted positively to the announcement and Baotou’s stock price fell by almost 4%.

In September this year, Baotou purchased praseodymium-neodymium oxide at above market rates in spite of being a producer of the oxide. The company stated that the move was to “protect resources and maintain market stability.”

Baotou’s announcement has been taken with a pinch of salt by the global rare earth community. The Financial Times wrote, “Baotou’s move suggests that Chinese efforts to control rare earths prices could be greater than previously thought.” Rare earth analyst Sam Berridge of RBS said, “We would expect a month-long shutdown from the largest producer in the world to impact prices reasonably quickly. Rare earth production is quite consolidated and the market is quite small, so one of the majors could influence the supply-demand balance quite easily.”

China’s actions could help rare earth prices climb although new supplies from Australia, Canada and the US could once again flood the market bringing prices down. In the meanwhile, companies such as Molycorp will benefit from Baotou’s announcement. In fact, analyst Paretosh Misra of Morgan Stanley has predicted that Molycorp’s stock price could reach $90 in the near future. Molycorp’s mines will reach full production next year while Canada’s Avalon Rare Metals and Quest Rare Minerals are yet to report profits. Both companies are much smaller and more volatile than Molycorp but both have rare earth deposits that would soon be rated as the world’s largest.

Rare earth deposits have been discovered at other global regions too. Mongolia has a huge deposit of rare earth metals and most of it is untapped. A 2009 survey by the US Geological Survey (USGS) estimated that Mongolia had about 31 million tonnes of rare earth metals, which places the country just after China in terms of deposit size.

Kazakhstan is another nation that intends to make an entry in the rare earth sector in 2012. The state nuclear company Kazatoprom has signed separate exploration agreements with the French Bureau for Geological and Mining Research, and Japan’s Toshiba Corp and Sumitomo Corp.

The USGS has also reported rare earth deposits in southern Afghanistan. The estimates have been pegged at 1 million metric tonnes although Afghanistan’s infrastructure and political climate are not conducive to rare earth development right now. Robert Tucker, lead author of the USGS report, said, “I fully expect that our estimates are conservative. With more time, and with more people doing proper exploration, it could become a major, major discovery.”

By Anthony David

http://www.criticalstrategicmetals.com

The mission of the Critical Strategic Metals Web Site

is to serve as a monthly compass for those who take a fundamental view of investment regarding the Molybdenum, Manganese and Magnesium metals markets, are concerned with the emerging critical under-supply of these strategic metals to Western nations and wish to profitability chart their course. Each month we will research and provide, in as short and concise a manner as possible, the most applicable information available on resources that will have the biggest impact on our day to day lives. Click here to sign-up for our FREE monthly report.

© 2011 Copyright  Anthony David- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife